Small Business Activist Wins Interim Victory Against Pentagon, Sikorsky

By Charles ClarkGovernment Executive
November 16, 2017

For four years, the small but vocal
American Small Business League has argued that large federal contractors
mislead agencies and the public by overstating their use of small businesses as
subcontractors to meet statutory goals.

In U.S. District Court in San Francisco
last Friday, attorneys for the advocacy group led by Lloyd Chapman and based in
Petaluma, Calif., successfully pried out the previously non-public names of
suppliers and other subcontractors used by Sikorsky Aircraft Corp.

The helicopter maker had joined with the
Defense and Justice departments in seeking to withhold such information as
proprietary when submitted to the Pentagon under its 27-year-old Comprehensive
Subcontracting Plan Test Program, designed to measure corporate potential
for increasing small business opportunities in subcontracting.

Small business booster Chapman has long
challenged the Pentagon’s program as nonproductive and oriented mostly toward
obfuscating the degree to which large contractors win defense business intended
for smaller ones.

After Chapman filed a FOIA request for the
names of Sikorsky’s subcontractors, the company and the government resisted,
winning a round in court last January. They argued that the FOIA request
infringed on rights to withhold proprietary information. “Disclosure would
provide competitors with information that they could use to improve their own
systems and capabilities to Sikorsky's detriment,” it said in a brief to
protect its 2012 submission to the Pentagon.

The withheld information comprised
“personal identifying information of Sikorsky employees, including their names,
phone numbers and email addresses, which was not disclosed to protect the individuals'
privacy; information regarding Sikorsky's training program, which is
proprietary because Sikorsky's approach to training distinguishes it from its
competitors and likely is a relevant factor in evaluating the strength of
Sikorsky's bid proposals . . . [and] the dollar amounts of actual subcontracts
awarded within the fiscal year, which is proprietary because it reveals
Sikorsky's purchasing strategies and methodologies and subcontracting
forecasts.”

After several rounds of negotiations
with District Judge William Alsup, Justice lawyers released versions of the
document, each with fewer redactions than the last, before releasing the most
revealing version yet on Nov. 10.

After examining the documents, Chapman
told Government Executive this week he found them “indecipherable,”
though just getting the new document made him feel he’d “struck gold. There are
some interesting anomalies. For some companies we find no information, some have
only one employee, and some are currently subsidies of Fortune 500 companies,”
he said. “It’s a very peculiar list.”

In response, his lawyers will be
requesting the names of all of Sikorsky’s suppliers and contractors. And in the
near future,” Chapman added, he will be requesting the names of all the
suppliers and subcontractors in Pentagon programs. “The significance is that
contractors that participate in the Comprehensive Subcontracting Plan Test
Program cannot withhold the names of subcontractors. It shows the Pentagon was
right when it said that small business contracts have plummeted as result of
the program.”

A Sikorsky spokesman, Paul Jackson, told
Government Executive, “We continue to maintain that the Sikorsky Small
Business Plan contains proprietary and confidential information, and we will
continue to oppose any further release of the information in question.”

A Defense spokesman said he could not
comment on pending litigation.

A Justice spokesman told Government
Executive that the negotiated release of a less-redacted version of the
document “does not resolve this matter as to those portions not released, nor
will it answer the many unanswered questions as to what sort of investigation
was conducted in the first instance by the defendants, and why this litigation
was necessary.” He declined to comment on whether the content of the documents
constitutes evidence in the dispute over whether large corporations
misrepresent their use of small business subcontractors.

Chapman’s team, however, remains
optimistic about continuing the case with a jury trial. "Some of the
information we seek had actually been posted on government websites and issued
in press
releases by Sikorsky," said one of Chapman’s attorneys, Jonathan
Cuneo, a partner of the Washington, D.C.-based Cuneo Gilbert & LaDuca LLP.
"The defendants hid behind a spurious trade secrets claim for four years.
Ironically, this case involves information with no national security
sensitivity about a single source, non-competitive Defense Department
contract."